Markets calm
Emergency security meeting: Defense Minister Kim Kwan-jin, second from right, shakes hands with U.S. Ambassador to Seoul Sung Kim at the Ministry of National Defense in Seoul, Wednesday, ahead of talks to discuss North Korea’s successful long-range rocket launch earlier. At left is USFK commander Gen. James Thurman and at right is Joint Chiefs of Staff chairman Gen. Jeong Sung-jo. Yonhap
By Kim Jae-won
South Korea’s financial markets shrugged off North Korea’s rocket launch Wednesday, with its stock markets ending in positive territory.
The Korea Composite Stock Price Index (KOSPI), the nation’s main stock bourse, closed at 1,975.44 on the day, up 10.82 points, or 0.55 percent from a day earlier. The tech-savvy lower bourse, the KOSDAQ closed at 485.33, gaining 3.74 points, or 0.78 percent from the previous day.
Foreign exchange markets also showed no signs of fluctuation with business as usual. The won-dollar exchange rate ended at 1,075.0 won, gaining 1.7 won from Tuesday.
Minister of Strategy and Finance Bahk Jae-wan said that South Korea will move quickly to cope with any possible market uncertainties stemming from the North’s rocket launch.
"We will thoroughly brace for any risk factors in the global financial markets and uncertainties that could be caused in the economic sector, while taking necessary steps preemptively and swiftly," Bahk told a crisis management meeting.
The Bank of Korea (BOK) also said it will closely monitor the financial markets to gauge the impact of the rocket launch and may implement market-stabilizing measures, if needed.
"North Korea's rocket launch does not seem to be having a big effect on the financial markets. But the BOK will closely watch the markets and take steps to stabilize them by cooperating with the government if needed," Park Won-shik, the BOK's senior deputy governor, told reporters.
On Tuesday, Vice Finance Minister Shin Je-yoon said the impact of the reports of the North's launch preparations had been marginal. Financial watchdogs said previously that even if the North goes ahead with its rocket launch, it would not have a significant impact on the domestic financial markets.
International experts echoed Korean policymakers, expecting that the rocket launch will have little impact on South Korea’s financial markets.
Standard & Poor’s said that it does not expect the rocket launch by North Korea to exert a material negative impact on the sovereign ratings of South Korea.
“We believe developments following the launch will not raise geopolitical risks on the Korean Peninsula on a prolonged basis. We also view the negative economic impact on South Korea to be modest and temporary,” said the credit ratings agency in a statement.
The rating appraiser added that the launch is an indication of the geopolitical risks that it considers in the credit factors affecting the creditworthiness of the South Korean government.
"The risks partly offset the relatively strong fiscal, economic and external metrics that support the credit ratings," it said.
Global investment banks released similar responses, ruling out possibility that the incident would evoke bigger impact on financial markets and the South’s economy.
“We think this (rocket launch) will only have a short-lived effect on the markets given that it comes as little surprise, as the first anniversary of the death of Kim Jong-il nears (Dec. 17) and ahead of the South Korean presidential election (Dec. 19),” said Nomura International economist Kwon Young-sun in a statement.